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Tuesday, May 26, 2015

I Always Find This One Interesting Stocks Get Far Less Risky as The Holding Period Increases

Although many academics use standard deviation as a measure of is pretty much useless for most investors. The first question they want answered is how much can I lose ? and the second far less important one is how much can I make ?

I run this graph periodically and it almost always surprises people. The risk of owning stocks based on historical data dramatically drops as the time frame lengthens as can be seen in the data below.
There has not been a 15 year period in which stocks generated a negative return and there has not been a ten year period in which a simple blend of 60% S+P 500 and 40% total US bond market has generated a negative return

Data below expressed in annualized return

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